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Life or death software
A proposal for open-source anesthesia software heightens the drama of the question: Who's at fault when software fails?
By Andrew Leonard
[08/05/99]

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Silicon Follies
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[08/04/99]

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[08/03/99]

The $4 billion warehouse
Silicon Valley investment titans finance dreams of grandeur, knowing they get rich even if the new business isn't a huge success.
By Mark Gimein
[08/02/99]

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It's a valiant ideal, to think that ethical behavior is in every journalist's blood. In fact, this principle that lives so close to the heart of the profession is not governed by any formal creed or law. Avoiding the appearance of conflict of interest is, of course, of paramount concern to any publication that wants to maintain credibility with its readers -- and most journalists understand that they shouldn't cover any subject that might have an impact on their personal life. Movie critics shouldn't review their friend's films, and tech or business journalists shouldn't report on companies in which they hold stock. But since there's no professional qualifying exam or oath you take to become a journalist, it's pretty much up to the journalists themselves and the publications they work for to define the rules.

The ethical guidelines for journalists' investments are far from standardized among newspapers, magazines and online services. Some publications merely forbid journalists from investing in "local companies," or companies that they write about, or companies in the industry that the journalist covers; others forbid their writers from owning any individual stocks at all. Some prohibit their writers from doing consulting work for companies in the industry they work for; others merely ask for disclosure. Some publications don't even have an ethics policy. The lack of standards means that when you ask technology journalists what they think is proper, you get some divergent opinions.

Compare, for example, these two definitions of ethics from two different technology journalists. The first, a freelancer, believed that "Anyone who covers business shouldn't invest in anything but mutual funds, or it's unethical." Another, a magazine editor who owned technology stocks, felt that "It's all right as long as there's no crossover -- and what I would invest in has nothing to do with what I write about."

Some tech journalists certainly don't feel compelled to steer clear of investing. Take Joey Anuff, who makes no attempt to hide his day-trading practice -- he is co-authoring a book about it, even as he is editor-in-chief of the snarky industry meta-commentary site Suck. Then, there's Michael Behar, an editor at Wired magazine who primarily covers science issues, but says he owns a handful of long-term technology stocks. There's James. J. Cramer, the founder and lead columnist of TheStreet.com, who often writes commentary about the stocks that his fund invests in -- and therefore includes a lengthy disclosure notice at the end of each column. There's Marshall Loeb, currently the editor of the Columbia Journalism Review but soon to depart for a job as a personal finance columnist for CBS Marketwatch, who sits on the board of the Internet company Priceline. Each of these people would argue that there's no conflict of interest in what they are doing.

Viewed through the lens of journalism's traditional ethics, some of these practices sure look fuzzy. But the old rules are hard to apply to the new economy. Take, for example, the old ethics standby of "don't invest in companies that are in the industry that you cover." For technology journalists, this can be tricky -- just consider how many "non-Internet" companies now have prominent Internet plays. Is Disney a technology company? AT&T? Viacom? And what about online publications which are also public companies, like CBS Marketwatch, TheStreet.com, Wired News (owned by Lycos), and CNet , not to mention Salon.com; they are both members and chroniclers of the Internet economy. If journalists like myself who work for these companies own stock or have options in these companies, can we claim to have no conflicts of interest? The most stringent interpretation of journalistic ethics would argue that, as participants in the sector, we shouldn't write about the Internet -- or that if we write about the Internet, we shouldn't participate in our companies' incentive stock option programs.

It's no wonder that the industry is questioning -- and revising -- its approach to ethics.

"You're in the thick of Silicon Valley. This isn't 1925, when nobody owned stock but the owners and wealthy capitalists," says Michael Malone, the editor of Forbes ASAP. "Now it's almost impossible to remain completely chaste on this. Even with your 401(k) you make choices," says Malone, the proud owner of some very valuable eBay and Seybold founding shareholder stock -- stock that he was granted during consulting and freelance work before his time at Forbes ASAP. Is this a conflict of interest? Nope, says Malone -- he simply refrains from writing about either company unless it's from a first-person, full-disclosure perspective.

Besides personal holdings, Malone adds, there's the issue of journalists with spouses who work in the industry or own their own technology stocks. He points out that one contributing editor at Forbes is the wife of Jim Clark, who not only founded Netscape and is chairman of Healtheon, but reportedly has invested much of his $435 million net worth in Net stocks. "It's so messy right now that the only viable solution is absolute full disclosure," says Malone. Forbes' ethics policy, he says, is "no speculation -- no friends and family, no flipping, no day trading." But owning long-term stocks is just fine, as long as you haven't written about the company.

Next page | If you can't hold Net stocks, can you buy into an Internet fund?